The 21st Century climate challenge

3Avoiding dangerous climate change: strategies for mitigationSuccessful mitigationultimately requires thatconsumers and investorsshift demand tolow-carbon energy sourcesabsorbing CO 2is marked by scarcity. The twobroad options for pricing emissions are taxationand cap-and-trade.The second foundation for mitigationis behavioural change in the broadest sense.Successful mitigation ultimately requiresthat consumers and investors shift demand tolow-carbon energy sources. Price incentivescan encourage behavioural change—but pricesalone will not deliver reductions on the scaleor at the pace required. Governments have acritical role to play in encouraging behaviouralchange to support the transition to a low-carboneconomy. Setting standards, providing information,encouraging research and development,and—where necessary—restricting choices thatcompromise efforts to tackle climate change areall key parts of the regulatory toolkit.International cooperation represents thethird leg of the mitigation tripod. Rich countrieshave to take the lead in tackling dangerousclimate change: they have to make the deepestand earliest cuts. However, any internationalframework that does not establish targets forall major greenhouse gas emitting countrieswill fail. Avoiding dangerous climate changerequires a low-carbon transition in developingcountries too. International cooperation canhelp to facilitate that transition, ensuring thatreduced emission pathways do not compromisehuman development and economic growth.This chapter provides an overview of themitigation challenge. It starts out by lookingfrom global to national carbon budgeting. Convertingthe global 21 st Century carbon budgetinto national budgets is the first step towardsmitigation of dangerous climate change. It isalso a precondition for the successful implementationof any multilateral agreement. Withgovernments negotiating the post-2012 frameworkfor the Kyoto Protocol, it is important thatnational targets are aligned with credible globaltargets. Currently, many target-setting exercisessuffer from a lack of clarity and consistency, compoundedin some cases by a divergence betweenstated goals and energy policy frameworks.In section 3.2 we then turn to the role ofmarket-based instruments in the transition tosustainable carbon budgeting. We set out thecase for carbon taxation and cap-and-tradeschemes, while highlighting the problems thathave reduced the effectiveness of the world’slargest such scheme—the European UnionEmissions Trading Scheme (EU ETS). Section3.3 looks beyond taxation and cap-and-trade tothe critical role of wider regulation and standardsand public–private partnerships in researchand development.The chapter concludes by highlighting theunderexploited potential of international cooperation.In section 3.4 we show how financialsupport and technology transfer could raisethe energy efficiency of developing countries,providing a win–win scenario for human developmentand climate change: extending accessto affordable energy while cutting emissions.Deforestation and land-use change, currently thesource of about 20 percent of world greenhousegas emissions, is another area of unexploitedopportunity in international cooperation.3.1 Setting mitigation targetsExpiry of the current commitment period of theKyoto Protocol in 2012 creates an opportunityfor early progress in climate change mitigation. Inchapter 1, we argued for a multilateral frameworkgeared towards well-defined global carbon budgetgoals. Such a framework has to combine longtermgoals (a 50 percent reduction on 1990 levelsin emissions of greenhouse gases by 2050), withmedium-term benchmarks set out in rolling commitmentperiods. The multilateral framework alsohas to provide a practical guide for implementingthe principle of "common but differentiatedresponsibility", identifying broad pathways fordeveloped and developing countries.112 HUMAN DEVELOPMENT REPORT 2007/2008